This Month in Gold – June 2012

Emerging Market Central Banks Add More Gold to Reserves
MarketWatch – The latest data from April shows emerging market central banks continued to add to their gold reserves. Among the top buyers, Mexico added 94,000 ounces, bringing its total gold reserves to 4.04 million ounces; Kazakhstan added 65,000 ounces, bringing its total to 3.16 million ounces; Ukraine added 45,000 ounces, bringing its total to 984,000 ounces; and Turkey took the cake, adding just shy of 1 million ounces. Notably, the Philippines lifted its gold stockpile by over a million ounces in the month prior, a move that UBS analyst Edel Tully said should “gather much attention from the market.”
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China May Overtake India as Biggest Gold User
Bloomberg – The economic juggernaut of the future just can’t seem to satisfy its appetite for gold. Mainland China imported six times as muchbullion during the first quarter of 2012 as it did during the same period in 2011. Specifically, China imported 135 metric tonnes from January to March through intermediaries in Hong Kong. The surging imports suggest the billion-plus population could soon overtake India to become the biggest gold user by weight in the world. It remains unclear, however, who exactly is taking delivery of all that gold; some analysts see the purchases through Hong Kong as primarily destined for the central bank in Beijing.
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Silver Analysts Are Bullish for Q4 2012
Bloomberg – Silver is sought after for its adaptability. First, silver actually has been money throughout the ages, so it does well in high-risk periods. Second, silver has myriad industrial applications, so it does just as well in high-growth environments. Given central bank pump-priming and continued growth in emerging markets, it is no surprise then that the median of 11 analysts tracked by Bloomberg see the grey metal climbing back to US$35/oz by the end of the year.
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Gross, Goldman See More Fed Easing Soon
Bloomberg – Once central banks start down the money-printing road, they typically don’t stop until the proverbial dung hits the fan. Pimco’s Bill Gross, manager of the world’s largest fixed-income fund, and Jan Hatzius, chief economist at Goldman Sachs, see the fan approaching rather quickly. Both see another round of large-scale asset purchases by the Fed, aka QE3, being announced this summer, possibly as early as the next Fed meeting on June 19th. Some Fed governors are skeptical that additional money-printing will help at this point, but Gross and Hatzius think the inflation doves will prevail.
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Italians Recycle L’Oro di Famiglia
Financial Times – Who would have thought that behind mega-markets China and the US, Italy is the world’s third largest recycler of gold? With global mining supply flat, and demand and price soaring, ‘green’ gold is going some of the way to fill the supply gap. Southern European countries have a time-honored tradition of gifting gold at major life milestones, and nowhere is the tradition more prominent than in Italy. “Since I was a child, I remember that gold was given as a gift on various occasions and people used to say: ‘Put it aside,'” recalls Ivana Ciabatti, head of Italian precious metals giant Italpreziosi. Well, with a sovereign debt crisis about to send that beautiful country into economic collapse, many Italians are deciding that rainy day has come.
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The Swiss Want Their Gold Back
Zero Hedge – Direct democracy and plutocracy make for awkward bedfellows. In an emerging challenge to the politicians in Bern, the people of Switzerland have jump-started the process of repatriating their national bullion reserve. The initiative, called Save Our Swiss Gold, needs 100K signatures to be put to a vote in the next federal election. If adopted, it will force the Swiss National Bank to do three things: (1) physically store gold reserves in Switzerland, (2) cease selling any more of the gold reserves, and (3) maintain at least 20 percent of total reserves in gold.
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